Continental Aktiengesellschaft (CON) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I'm the Chairman of the Supervisory Board. And according to our Articles of Association, it is my duty to chair this meeting. I hereby open the annual Shareholders' Meeting of Continental AG, and I welcome you all, our shareholders and shareholder representatives, most cordially. My welcome also goes to the media representatives and any other interested viewers who are following our Annual Shareholders Meeting. Today, I'm speaking to you from the [ Herrenhausen ] meeting room at the company's headquarters in Hanover. As in previous years, I would have liked to personally welcome you in the [ Dorm Hall ] at Hanover Congress Centrum. However, seeing that the COVID-19 pandemic is still ongoing and protection measures are still needed, this, unfortunately, is not possible this year around. You will have read in the invitation that the Executive Board with the approval of the Supervisory Board decided on the basis of the so-called COVID-19 act to hold this year's annual shareholders' meeting without the physical presence of shareholders or their representatives. We took that decision because we want to protect the health of our shareholders and our staff charged with organizing the annual shareholders' meeting as best as we can. And that is why I appreciate you joining our virtual shareholders meeting and your interest in our company even more. In order to comply with the contact restrictions, which are currently in place, we have limited the number of people present in the meeting room today to a small number of participants. The other people present in the meeting room are the Chairman of the Executive Board, Dr. Elmar Degenhart. And the 2 more Executive Board members, namely Dr. Ariane Reinhart, Group Human Relations; and Wolfgang Schafer, Group Finance and Controlling. I'm pleased to welcome both of you. I would also like to welcome the notary public, [ Dr. Florian Harten ], who's also present in the meeting room. [ Dr. Harten ] will take care of the minutes of the annual shareholders' meeting. The proxies designated by the company are also present in the meeting room. The other members of the Supervisory Board and the Executive Board members are following the live broadcast of the ASM via live stream. And I would like to extend a warm welcome to you, too, my esteemed colleagues on the Supervisory Board and the other Executive Board members. Holding a virtual shareholders meeting inevitably requires a number of changes to be made regarding the conduct of the meeting and also regarding shareholders' rights. This year, it won't be possible for shareholders to take the floor or present motions at the meeting, which means that, unfortunately, at this virtual shareholders' meeting, there will be no direct dialogue between you and the members of the Supervisory Board and the Executive Board. However, to the extent possible in technical and legal terms, the company has arranged for shareholders to be able to exercise certain shareholders' rights before or, in fact, even during the annual shareholders' meeting. For those of you currently watching our shareholders' meeting online will have gained access to the live broadcast via Continental's website. However, I'd like to point out that there is a difference between the public broadcast for interested members of the public and the investor portal for our registered shareholders. Interested members of the public may watch the live broadcast of the entire shareholders meeting via the company's website, which is publicly accessible. Please note, however, that it is not possible to exercise shareholders' rights and more specifically to vote, if you are watching the public broadcast. I would like to ask those shareholders and shareholder representatives who have registered for our shareholders' meeting to go to the investor portal to log into the broadcast. You will find the investor portal interface above the public broadcast button on the company's website. During the annual shareholders' meeting, you may only exercise your shareholder rights and your voting right, in particular, through the investor portal. This will be possible until I, as the Chairman of the Annual Shareholders' Meeting, announced that the votes on the agenda items is closed. Additionally, the investor portal allows you to raise an objection against resolutions adopted at this Annual Shareholders' Meeting for the record. This feature will be available until the end of the meeting. Of course, you may also use the investor portal to follow the live broadcast of the shareholders' meeting. If you wish to log into the investor portal, you will need your registration confirmation document, which gives you your so-called registration confirmation number and the Internet access code. Once you are locked in, you may, as long as the meeting last, exercise your voting rights either by authorizing and issuing voting instructions to the company proxies electronically or you may do so by electronic postal vote. Therefore, I would like to recommend that all properly registered shareholders log into the investor portal unless they have done so already, so that you may properly exercise your shareholders' rights. Now it is in the very nature of a virtual annual shareholders' meeting that a general debate is not possible. Nevertheless, the company had arranged for shareholders to submit questions via the investor portal to the Executive Board and the Supervisory Board up until 2 days before this Annual Shareholders' Meeting, that is until Saturday, the 11th of July 2020, at midnight. There is a detailed description on how this works and more technical information on how to submit questions in the invitation to the Annual Shareholders' Meeting. After the Supervisory Board and the Executive Board's report, we will respond to your questions in detail. Now before I proceed to the formalities and the agenda of this ASM, I would like to take some time to thank all the men and women working in the health sector. The COVID-19 pandemic is making great demands of all of us and even more so of those providing medical care. You've done a great job. That's what I think. The pandemic affects all of us, but not everybody is affected equally. And that is why I would like to invite you to join me to commemorate the victims of this pandemic and share in the grief for the lives lost. Our thoughts should also serve as a reminder to remain vigilant and act responsibly both in our spare time and at work because we are acutely aware of the risks that have not gone away yet. So I would like to extend a special vote of thanks to all employees of the Continental Group worldwide for your team spirit, for your creativity and your commitment during these challenging times. Protecting your health is the top priority for us. The Supervisory Board, therefore, fully supports the efforts on the part of the Executive Board and the management staff in this respect. Ladies and gentlemen, let me now take care of some matter of forms governing this Annual Shareholders' Meeting and let me share some more details on the conduct of this meeting with you. On formalities relating to the invitation, I'd like to state as follows: The Executive Board published the invitation to this ASM, including the agenda and the proposed resolutions in the Federal Gazette on the 5th of June 2020. At the same time, the invitation was sent to media outlets for publication all over Europe. Since that day, the invitation has been accessible on the company's website, too. On the 26th of June 2020, the Executive Board published an amendment to agenda item 6 on the company's website. That amendment was published in the Federal Gazette on the 30th of June 2020, and it was also published in media outlets all over Europe. The notary public will file a copy of the invitation together with the minutes of this Annual Shareholders' Meeting. The notifications required under Section 125 of the German Stock Corporation Act have been made. More specifically, the Executive Board notified credit institutions and shareholder associations of the invitation to this ASM in due time if they had exercised voting rights on behalf of shareholders at past ASMs or if they had requested such notification. Ever since the invitation to this Annual Shareholders' Meeting was published on the 5th of June 2020, documents for shareholders, which are subject to a legal disclosure requirement, have been available for inspection on the company's premises. Since then and also during the Annual Shareholders' Meeting, these documents have been accessible via the company's website, and they're also available in the meeting room today. I, thus, note that this Annual Shareholders' Meeting was convened in due time and form and in compliance with the law and the company's articles of association. We have received 1 countermotion, which, in line with the provisions of the German Stock Corporation Act, we also published in the ASM section of the company's website. At this virtual annual shareholders meeting, too, we will prepare a list of participants, which is available for inspection in the meeting room. Given the physical absence of shareholders and shareholder representatives, the list will only include the names of the company proxies and the number of postal votes cast. After I announce the attendance count, I will hand over the list of participants to the notary public. And I would like to give you the current attendance figures now. So I've received the list of the share capital represented at this AGM. The share capital of the company amounts to EUR 512,015,316.48 and is divided into 200,005,983 in per value shares. Shareholder representatives today present here are representing 169,585,699 shares, and this is also the number of votes present at this meeting, which corresponds to 84.79% of the company's share capital. Another 39,780 shares are represented by postal vote, which is 0.02% of the share capital. In total, there are 169,625,479 shares, and this is also the number of votes present at this meeting, which corresponds to 84.81% of the company's share capital. Ladies and gentlemen, this is the end of my introductory remarks and comments. We will now proceed to today's agenda. The full content and wording of the proposed resolutions, together with the invitation to this ASM, were published in the Federal Gazette on the 5th of June and also on the 30th of June 2020. So with respect to that content, let me start with Item 1 of today's agenda, presentation of the adopted annual financial statements of Continental Aktiengesellschaft and the consolidated financial statements approved by the Supervisory Board each as of December 31, 2019. The management report for Continental Aktiengesellschaft and for the group for the fiscal year 2019, the proposal of the Executive Board on the appropriation of net income as well as the report of the Supervisory Board and the explanatory report of the Executive Board on the information provided pursuant to Section 289a (1) and Section 315a (1) of the German Commercial Code. The statutory auditor, KPMG AG Wirtschaftsprüfungsgesellschaft in Hanover, reviewed the annual financial statement and the consolidated financial statement, including the combined management report for Continental AG and the Continental Group and issued their unqualified opinion. Both the Audit Committee and the Supervisory Board met in the presence of the auditor to discuss selected items. At this meeting on the 17th of March 2020, the Supervisory Board approved the annual financial statement of Continental AG, the consolidated financial statement, including the combined management report based on its own review and the review and the recommendation of the Audit Committee. According to Section 172 of the German Stock Corporation Act, the annual financial statement of Continental AG has thus been adopted. The Audit Committee and the Supervisory Board also conducted a detailed review of the report on relations with affiliated companies, the so-called dependent company report and its final declaration. The auditor also closely examined the dependent company report and issued its unqualified opinion. You will know that, together with the annual financial statement of Continental AG, the Executive Board submitted a proposal on the appropriation of net income, which includes the distribution of a dividend of EUR 4 per share. This dividend proposal was approximately 15% below the previous year's dividend of EUR 4.75. In its meeting on the 17th of March 2020, when the Supervisory Board approved that proposal, both the Supervisory Board and the Executive Board were convinced that a dividend of EUR 4 would be appropriate, in particular, given the recent share price development and the expected return. In the meantime, however, the environment we're operating in has changed dramatically. The COVID-19 pandemic has caused the Continental Group to make significant adjustments and has led to serious disruptions to our business. This prompted the Executive Board and the Supervisory Board to reexamine the appropriation of net income and to carefully reconsider the return expected by our shareholders on the one hand and strengthening the capital and liquidity position of the company on the other. As a result, the Executive Board and the Supervisory Board are now proposing a dividend of EUR 3 per share for the fiscal year 2019. We are convinced that in the current situation, this adjusted dividend proposal equally contributes to the short- and long-term interest of Continental to your interest as shareholders and to the interest of further stakeholders. Ladies and gentlemen, I would now like to move on to the report of the Supervisory Board. Let me start by informing you about the personnel changes that occurred. There has been 1 change in the composition of the Executive Board since the last Annual Shareholders' Meeting. With effect from the 3rd of June 2020, the Supervisory Board appointed Mr. Andreas Wolf as a member of the Executive Board of Continental AG. Since the beginning of October 2018, Mr. Wolf has been in charge of the Vitesco Technologies business division, which specializes in powertrain electrification. After the spin-off of the business division was postponed because of adverse economic conditions, Mr. Wolf's appointment to the Executive Board corresponds with his responsibility and the significance of the business division within the Continental Group. As is usual practice for first appointments, the mandate is valid for a maximum period of 3 years. However, it will end prematurely with effect from the spin-off date of Vitesco Technologies, which is still planned. I'm looking forward to the cooperation with you, Mr. Wolf, and I wish you the very best and every success also on behalf of my Supervisory Board colleagues. Now before I continue my report on the Supervisory Board's activities, let me inform you that, as always, the Supervisory Board closely supervised, carefully monitored and advised the Executive Board and the management of the company. And we have satisfied ourselves of the legality and experience of management. In 2019, the Supervisory Board held 4 ordinary meetings, 2 extraordinary meetings and 1 strategy meeting. The Chairman's Committee held 3 meetings and 1 telephone conference in the year under review. The Audit Committee met 4 times and held 1 telephone conference in 2019. The Nomination Committee met once before the last Annual Shareholders' Meeting to discuss and approve the nominations for candidates for election as shareholder representatives to the Supervisory Board. The Mediation Committee, in accordance with German Codetermination Act, was not required to meet in the last fiscal year. On the basis of the German Act for the Implementation of the Second EU Shareholder Rights Directive, which took effect on the 1st of January 2020, the Supervisory Board agreed the establishment of a committee for transactions with related parties. Apart from that, there are no further committees. Let me tell you now what the key topics of the Supervisory Board's discussions were during 2019. First, I'd like to mention the reorganization of the company, including the creation of the Automotive Board for the Automotive Technologies division and the corresponding personnel changes. We also addressed the question on how our group should ideally address the major challenges ahead due to further declining markets and the simultaneous partially disruptive and dramatically accelerating transformation of the entire automotive industry. In that context, it was our task to discuss the strategy and the need for action identified by the Executive Board geared towards maintaining the long-term financial strength of Continental and also increasing its competitiveness and safeguarding its viability. The Supervisory Board also noted and approved the Executive Board's decision to examine the feasibility of not only a partial IPO of the powertrain division, but also its full spin-off with the subsequent listing. Now we would have liked to present this project for resolution today. However, with a view to the COVID-19 pandemic and the dramatic economic consequences for Continental and Vitesco Technologies, which followed, the Executive Board decided on the 30th of April 2020 to not submit the planned spin-off for approval at this year's Annual Shareholders' Meeting, not yet. We are still convinced, though, that a spin-off would be the right strategic decision and that it would also be in the interest of both Continental and Vitesco Technologies. So our objective remains unchanged. We intend to go ahead with the spin-off as soon as we are seeing real and stable improvements in the markets. As we announced last year, the Supervisory Board with the support of an independent compensation consultant, again, conducted a thorough review of the remuneration system for the Executive Board members. At its meeting in December 2019, the Supervisory Board discussed the details of the changes to the remuneration system, which resulted from that review. One objective was to come up with a remuneration system, which would meet the provisions of the aforementioned Second EU Shareholder Rights Directive and also the recommendations from the revised version of the German Corporate Governance Code. With this in mind, the Supervisory Board at its extraordinary meeting on the 19th of February 2020 adopted the new remuneration system and finally agreed the individual remuneration for the Executive Board members in its meetings on the 17th of March and the 3rd of June 2020. Esteemed shareholders, today, we are presenting the new remuneration system for the Executive Board to you for approval. We are convinced that the new remuneration system will be an important part in promoting the business strategy of Continental AG. It will motivate the Executive Board members to try and achieve key strategic objectives of the group, notably increasing the company's value and developing a topnotch market position in terms of customer focus, quality and market share. The focus of the new system is also on the sustainable and long-term development of Continental, and is expressed by the fact that the bigger share of the target total compensation is made up of a variable component. The variable compensation elements in turn consists, for the biggest part, of long-term components with a multiyear assessment basis, which is linked entirely to the relative performance of the Continental share in comparison with the share price performance of other companies in the automotive sector. Additionally, the long-term remuneration elements are also determined by sustainability targets. This way, Continental makes sure that there is a direct and close link between the ambitious targets of the company's sustainability strategy and the remuneration of the Executive Board. Of course, the new remuneration system also provides for a cap to the Executive Board's remuneration. And in this respect, it fully complies with the legal requirements and the recommendations from the German Corporate Governance Code, and it will apply retroactively with effect from the 1st of January 2020. In addition to the new Executive Board remuneration system, we are also presenting for your approval a new remuneration system for the Supervisory Board. Inspired by the German Corporate Governance Code, the future remuneration for the Supervisory Board is to exclusively consist of a fixed compensation element. The changeover to fixed remuneration only is helpful when it comes to advising and monitoring the Executive Board's management of the company with a focus on sustainable corporate development, especially in difficult times, and it also strengthens the independence of the Supervisory Board members. Provided we get your approval, the new remuneration system will apply for this fiscal year for the first time. You may also want to know that the Supervisory Board members agreed, as an act of solidarity with our employees who are under a lot of pressure because of short-time work and similar measures, to accept the voluntary cuts to their fixed remuneration this year, which is what the Executive Board of Continental AG also did. At each meeting of the plenary session in 2019, the Executive Board informed the Supervisory Board in detail of the sales results and employment development in the corporation and individual divisions as well as the financial situation of the company. Where the actual course of business deviated from the defined plans and targets, the Executive Board provided detailed explanations. It discussed the reasons for these deviations and the measures introduced in depth with Supervisory Board. At the aforementioned strategy meeting in September 2019, the Executive Board and the Supervisory Board once again discussed at length the strategic objectives and strategic planning of the corporation and the divisions as well as the HR strategy. The topics included, in particular, automated driving, connectivity, electrification, the Rubber Group's growth strategy and, as a key theme, artificial intelligence. On the 20th of November 2019, another extraordinary meeting was held in which we yet again thoroughly reviewed the structural changes discussed back in September and at which we approved measures in the Interior division, Instrumentation & Drive HMI business unit and also in connection with the discontinuation of the Powertrain division's hydraulics business. In December 2019, the Supervisory Board and the Executive Board issued an updated declaration in accordance with Section 161 of the German Stock Corporation Act on the recommendations of the German Corporate Governance Code. The declaration is available on the company's website at any time. In line with the recommendations of the code, I, as Chairman of the Supervisory Board, also discussed supervisory issues with the investors. Further information on corporate governance is included in the corporate governance report starting on Page 12. The Audit Committee was also informed by the Executive Board in detail and on an ongoing basis about sales results and the employment development in the corporation and individual divisions as well as the financial situation of the company. The Audit Committee also had information on the progress of major acquisition and investment projects as it does regularly every year. In 2019, for example, this related, in particular, to the acquisition of the Bandvulc Group, United Kingdom by the Tire division 2016 and the establishment of the joint venture, Osram Continental GmbH in 2018. Before publication, the Audit Committee had a detailed discussion and conducted a critical assessment of the interim financial reports with a special focus on the earnings figures for the period under review and the outlook for the year. The Audit Committee is also closely involved in the company's compliance and risk management. The Executive Board provided regular reports to the Audit Committee on the activities in the compliance department and an internal audit and informed about major incidents. In consultation with the Executive Board, the heads of the Compliance department and of Internal Audit were also available directly to the Audit Committee and its Chairman if information was required. Esteemed shareholders, before I conclude my report, let me highlight once again that the COVID-19 pandemic and its ramifications for our company made a strong mark on the activities of the Supervisory Board in the second half year of 2022 and provided us with quite a challenge. In addition to the 2 regular meetings, there were 3 extraordinary meetings, virtual meetings in which the Executive Board provided us with regular reports on the current situation. The Supervisory Board carefully advised and monitored the Executive Board and its management of the current crisis. Ladies and gentlemen, this concludes my report on the activities of the Supervisory Board. Next on the agenda is Dr. Degenhart's report with a special focus on agenda item 1. Dr. Degenhart, the floor is yours. We are looking forward to your reports.

Sometimes it's the invisible things that trigger visible changes. Today and in these days, this applies to viruses as well as it does to this piece of innovation here. What I'm holding in my hands is the heart of digital and connected mobility. It is a topnotch computer. Soon, it will be found in each and every modern car. And this is the beginning of the end of driving as we know it, as we have known it for the past 120 years. By 2022, just one of our customers alone will have purchased more than 2.5 million of these computers from us. Agile, digital and connected, that's who we are, that's how we are. And this describes our pioneering technologies. They can be found in 3 out of 4 vehicles around the world. This is how we are overcoming the crisis, with innovation and with a very clear plan forward. We're following this plan in a consistent and persistent manner. This means that we will stay competitive. Ladies and gentlemen, welcome to our Annual Shareholders' Meeting, our first one online. Today, we will not be meeting face to face. So this means there will be something that we'll be missing. However, we can still meet online in a digital format without any viruses and without the risk of infection, and I'm pleased about it. We are less than pleased about the economic environment. We are in the midst of an economic crisis, and this did not just start this year. Number of passenger cars and light commercial vehicles produced globally shows it. The upmost 70 million will roll off the lines by the end of 2020. Comparable slump was last seen during the Great Depression of the 1930s. Never before has our entire industry been at a standstill all around the world. So we see that our industry is at the bottom of a slump. But for your company, Continental, that means we are now looking upwards. We have a clear plan for the crisis consisting of 4 points, and we have concentrated on those first with all of our energy. First, the health of our workforce. We are protecting them from the virus. This is of the utmost significance. To this end, we quickly shut down production lines and converted them. About 85,000 employees work remotely, for example, from their homes. Everyone at Continental has cut back in the crisis. They've organized the orderly shutdown and resumption of production, set up production of protective mask, everyone shows a great deal of consideration for each other. So the performance we are seeing is outstanding. It once again shows just how well we play together as a team. This is what we think is great. And therefore, I think it's very important to say thank you. On behalf of everyone, thanks. My thanks go to the global Continental team. Now the second topic, we ensure that we have sufficient liquidity. To this end, we are cutting our costs. We're investing less. Compared to last year, at least 1/5 of investment will there be less. We are having financial sources. In May and June, we placed 3 bonds on the capital market. In total, more than EUR 2.1 billion will be flowing our way. And with our banks, we have expanded our credit facility by EUR 3 billion. All of these are quite important steps. They give us more independence, more room to maneuver. And that, of course, is rather decisive. Just as important are the justified expectations of all of our stakeholders. We are constantly striving to take all of them along in our considerations, which is why we are proposing a dividend of EUR 3 per share to you today. Because of the consequences of the pandemic, we reduced it by EUR 1.75 compared to the previous year. By doing so, we are taking into account the interest of everyone in your company, Continental, those of today and those of tomorrow. And at the same time, we are acting in your interest. After all, you are investing in your company, in your Continental. You are showing us your trust, and we do everything so that it will pay off for you in the long term. This is our clear goal. Our third area of focus is this, we are acting speedily and with determination. Within a period of just under 2 weeks, we temporarily shut down more than 100 factories all over the world together with 35 regional groups. It just took a couple of days, and then we had to fully set up our crisis processes. Our first question here was how are we going to protect our staff from the virus? After just 10 days, we had a complete concept up and running for it. We're using this everywhere, and we shared it with our suppliers. So everyone is benefiting from this. The fourth part of our crisis program is this, intensive communication. We are doing this time and again within our company and also towards the outside. To this end, we introduced our own crisis app. It was up and running in record time. With this app, we are able to reach out to our workforce everywhere, in particular, in production, providing clear and precise information. This is how my colleagues and I on the Executive Board are working on this. We do this in interactive contact with our employees. We're answering their questions, and we're streaming everything on the company's intranet live and without any filters attached. Since the outbreak of the pandemic, we have already held more than 25 of these digital meetings. And in all of this, we have 1 guiding principle, that of transparency. So we are being open, we are honest, we explain how we see the situation and we say what we expect to come. And this is what I will be doing today. I will tell you very clearly that the production volume decreases in the automotive industry worldwide without precedent from 2017 until today. More than 25% fewer vehicles will have rode and have rode off the lines, and there will not be a fast recovery, neither in Europe nor in North America. I'm also very clear about another thing, the number of cars being produced around the world will be increasing only slowly. Earliest, after 2025 will we have reached the level of 2017. This is reflected by the sales in our industry. They're falling drastically. Everything is suddenly in a downward spiral, and there is no upward trend in sight. So the top priority must be to remain solvent. And this is what everyone is adapting for and even faster than originally was planned for. In the interest of truth and transparency, however, we have to say that the situation of suppliers had already been very intense in 2019. Our figures clearly reflect this. About EUR 44.5 billion sales adjusted and in purely organic terms, those were 2.6% less than in 2018. An adjusted operating result of EUR 3.2 billion, which was EUR 900 million less than in the previous year. The adjusted EBIT margin fell from 9.3% to 7.4%. For the first time in 10 years, EBIT was not positive. Instead, it showed a negative EUR 268 million. And group net income was negative, minus EUR 1.2 billion. Above all, this was due to the goodwill of earlier acquisitions. Because of the slump in car production, this fell. We had write-downs of about EUR 2.5 billion for this. Now let me be clear. We are not satisfied with this performance. We can do better, and we will be doing just that. The pandemic has also brought us additional setbacks. We have just finished the second quarter. It will be the weakest in the history of the automotive industry since 1945. Losses are likely to be in the billions for the industry. Now we are anticipating that the third quarter will be a truly difficult one. We do see production figures for cars rising, which indicates higher sales compared to those in the second quarter. However, it will be substantially lower than that in the third quarter of 2019. We can still -- we cannot make more precise forecast for 2020 as of now. However, we can rely on 1 advantage this year. We're not as susceptible to the ups and downs of the automotive industry everywhere to the same amount. For instance, this is true to our business areas of tires and ContiTech. They are also serving other markets that have different cycles. Their success is supporting us now. In tires, we are profiting from our business with consumers. ContiTech serves entirely different industries. Examples are agricultural and food industry, rail transport and shipping, households, garden and recreation areas. Ladies and gentlemen, a winner is someone who plays well even when things are not going so well. And currently, things are not going well for our industry. However, we are maintaining our position in the global elite of the providers of top technologies and software. Only those who are playing in this league, who are the most competitive and forward-looking teams, only such companies can provide value-creating jobs in the long term. And only then can we ensure that there will be good income and prosperity. What turns us into such a winner? Well, above all, it is our attitude. We play to win. We are always looking for opportunities. We have a positive attitude. We like to change, and we are focused and focus on our plan. Since 2019, we have been shaping our biggest transformation to date. We are realigning our operations. This goes for our technologies as well as for our organization. We are pursuing our strategy until 2029. Does the current crisis change anything here? Clear answer is no. It does not. Quite to the contrary, we will be working even harder now. Our plan has very clear goals. We are focusing firmly on those goals. To achieve them, we are devoting all our energy to them and a high level of focus. We're expanding our portfolio where it's growing profitably, and we are making it even more fit for the future. We are shaping our production network accordingly worldwide, and we are speeding up our processes in even leaner structures. Our restructuring plan is our path towards the future. It is and it will remain our most important task. We have already completed or initiated several key parts of this. To a great extent, we have separated our Powertrain business. Vitesco Technologies will become an independent company. It has what it takes to make it on the market on its own, on a market that is experiencing strong growth while undergoing equally strong consolidation. We have postponed the planned spin-off to a later point of time because the current environment does not mean that the colleagues have -- would have any freedom to act in an entrepreneurial manner and make decisions. However, the coast is clear. It's set. The right time will come. We are well prepared, and we are ready to get started. We are moving forward with determination. We are taking care of one task after the next. From 2024 onwards, we will no longer produce any -- and develop any high-pressure pumps for gasoline and diesel engines in Germany. 2028, we will not make injectors for diesel and gasoline engines in Western Europe. In the United States, in 2024, we will stop the production of injectors for gasoline engines. In Germany, the production of automotive displays and controls is no longer competitive. We will have phased it out by the end of 2025 for this reason. In the United States and in Western Europe, we are closing 2 locations for hydraulic brake systems. We have restructured automotive technologies. Its share of electronics is the highest in the industry. This is -- which constitutes the engine room for intelligent mobility. This is where we are developing key components for our software. We are doing it quickly as flexible than -- more flexible than ever before and with less expenditure than before. So much on a first quick rundown on the situation. What will we be gaining from all of this? Well, quite a lot. All in all, we will reduce gross costs by about EUR 500 million. And we do that every single year. We're making good progress. The full savings will be achieved by 2023 already. We have already changed nearly 3,000 jobs around the world. And now there is corona. The coronavirus is exacerbating the economic downturn. This is why our industry is progressing more slowly now. This has presented us with a second rather urgent task. It is referring to our overarching financial structure. We are just readjusting it now because our current cost structure no longer fits and is in line with a lower global vehicle production. For this reason, we are building ourselves a kind of bridge over the coming years, a coronavirus bridge. It will lead us back to success. Here, we are reducing overcapacities and initiating further measures that will have a quick effect. We are reducing investment. We are decreasing working capital. We are cutting labor and material costs. To put it plainly, we are reducing even more costs now, several hundred million euros. And we will go beyond what we have decided upon already. It will have an impact until 2022. Here, we are already in close contact with the representatives of our workforce. We will strive to agree upon mechanisms, and we are now trying to make progress quickly and effectively. However, with everything that we're doing, it is possible that we will have to go the way of redundancies despite all of our efforts. This, however, will be the means of the last resort. We will provide details to you as soon as possible. Yes, it is true. We are changing more things than before. But today, we can already promise to you we're staying true to our principles. That means we are making changes in a balanced and fair manner in line with our values and in such a way that we change and improve our innovation -- innovative prowess. We want to be competitive. We want to stay fit for the future. Both is and goes to have long-term growth. And to that end, we are developing top technology. Each day, an estimated 1 billion people trust us with their lives when they use their cars. They rely on us because with our technologies on board, they get to places safely, cleanly in comfortable and convenient manner. Our heart is beating for healthy mobility ecosystem. It's a system in which all the 3 key requirements are balanced. It's the ecology, economics and social matters. We are paving the way for this. We are making people mobile. We are providing them with safety and with enjoyment. We're helping to protect the environment and enhance climate neutrality. And we're doing so at affordable prices so that as many people as possible can contribute to the healthy ecosystem. That's a huge task. And it starts right here with us, which is why we are clearly saying that, as of this year, we will be purchasing electricity only from verified renewable sources for all our plant locations worldwide. Production processes will be carbon-neutral by 2040. And by 2050, on all of the stages of our value creation, we won't have any CO2 emissions. And this is true for our production processes, but it's also true for what comes out of it. This way, we are growing in a profitable and sustainable manner, mainly in 3 technological areas. First, in the field of digitalization, everything will become new with it. We are changing our solutions and processes, and we are using new business opportunities. Second, the field of assisted and automated driving. We will base autonomous driving on this. And thirdly, in the field of emission-free driving. Through digitalization, we are turning the vehicle into a part of the Internet with telematics, with electronics for chassis and antennas. These are among our major strongholds. And now we are adding further strengths. We are developing new architectures for the electronics in the car. And we are also paving the way for standardized operating systems. You all know such systems from your mobile phones. As a user, you usually download your new programs, all of that without any cables. And that is the way which it will be for the cars in the future. The business will be growing rapidly. Just as important is the protection against cyberattacks. The cars will need this just like mobile phones. And here, your company, Continental, is playing a leading role. So is digitalization going to be worthwhile? Yes, of course, it is. We're already achieving sales in the billions here. And the trend is strongly rising. This is not everything. We are also benefiting from our technologies for the human machine interface. As an example, let me mention animated displays. These are new systems that graphically show information in the driver's field of vision inside the car. In the picture, you see a large area display, which is 3 dimensional, and it can be operated intuitively. What's it good for? Well, for us, we have an annual -- we have annual sales of hundreds of millions, and the trend is strongly rising as well. And this is not everything. The next major opportunity can be found here in this piece of innovation you have already seen. It's this computer. It might look pretty small. But when it comes to performance, it's huge. Germany is looking for the next superstar. Well, we've got it. Here it is. It's the digital heart of vehicles. In the future, several of these hearts will be beating in the car. One, for example, will be controlling the car's motion. Another one will connect the car to others or it will help driving it. A third one will create a landscape with displays in the passenger compartment. The car will talk with people in an entirely new way. And lots -- there's lots of potential in all of this. It will drive our potential growth for many years, especially this little computer, small in size, but big in performance. We have already landed sales of more than EUR 3 billion with it. And this is calculated based upon the lifetime of the respective model lines. And this is just the start. By 2022 alone, we are expecting more than 10 further projects. And finally, a few words about the fourth field of application for digital technologies. I'm talking about new mobility services. Here, we are making the most of our decisive advantage because we are making nearly all of our products intelligent for this purpose. For instance, we are digitalizing tires and air spring systems. Our intelligent tires are going over long distances. They work quietly, and they save energy. They share their data with the cloud. In doing so, they're constantly learning. In the future, they will adjust their inflation pressure to the road surface. They will keep looking ahead to see what is coming. And they can do it very well because the cloud gives them the data they need for it. Tire data are already in great demand. We send them to the vehicle fleet operators via our digital services. This boosts our business with them because we are making about EUR 1 billion in sales each year with fleets, and that's going to increase. We'll have 3x that sum by the year 2030. Our electronic air-spring system is also an intelligent one. We've expanded it with a kind of built-in scale. It constantly shows the load weight or payload. Thus, it indicates if there is overloading. It helps the drivers, it helps the owners because the transport then complies with legal regulations, makes traffic general safer. And without overloads, trucks subject roads to less wear and tear. Or take our fleetmatch app, makes life easier for people who drive something, who steer something like a truck or who manage a whole fleet of trucks. In Germany, drivers use it to rate the loading docks. What's it like there? How long do we have to wait? Or how friendly is the personnel dealing with the drivers? In all of these cases, software is the oxygen of the industry. It makes entirely new services possible. Our customers are very interested in such services. They are anticipating a market with sales of several billion euros, and this will happen just within a few years' time. A supplier of technology like us has a key role to play here because the fact is that suppliers now create around 90% of all of the programs inside the cars. In the future, car manufacturers themselves will provide more of these programs themselves. However, is that going to take the opportunities away from us? No, we don't think so because, at the same time, we are expecting an enormous amount of profitable growth. The reason is that there will be more and more functions inside the vehicle. And thus value creation with computer programs will increase. It grows by double-digit percentages every year, which is good for us. And it's getting even better. This digitalization is one of the main driving forces when it comes to our production. It's a matter of dealing with large amounts of data and robotics. We see the greatest potential for the coming years in this area. And here, we will create top value. At present, we're already using 1,600 co-bots. They work hand in hand with their human colleagues. Thanks to intelligent technology, we also know where each and every component is in the process. This makes us even faster and even more efficient. And now on to our second area of growth, the business with systems for assisted and automated driving. Based on this, we will develop autonomous driving by and by. We are developing these technologies for 0 traffic accidents and 0 traffic fatalities. This vision 0 is already a real possibility. You probably know it from your very own car. I'm talking about our intelligence systems that assist you when you are driving. They help you when you are in traffic jams or when you go through construction sites. But there are also those systems that assist us when cornering. Take for instance intelligent cruise control. Such technologies protect lives. In the car, your own life. And outside the car, the lives of others. This is why they are of interest to private customers and fleet customers alike. Everyone wants them. This is clear why the business is growing so fast, faster than hardly any other business. However, those of you who drive also have to break. That's, of course, natural. Our brake systems are fast, precise and highly integrated. They're also extremely reliable. And obviously, they are there whenever they are really needed. This is how they support automated driving. By 2023, we will have sold nearly 40 million of these systems. So take our product range for passive safety and sensorics. It includes systems designed to protect passengers as well as sensors for a safe chassis. We are already selling more than 350 million of them every year. And finally, there is our third area of growth, technologies for clean vehicle drive systems. Of course, that e-mobility belongs to it. The "e" here does not just stand for electric. It also stands for emission-free, be it with a battery or fuel cell, e-mobility is a growth market. And thus, it's a huge opportunity for Vitesco Technologies, which is why we have unified the right types of strengths there. Our strength above all are in electronics and mechatronics, but even more in the integration of systems. This is where we take the full advantage of them. By pooling them, we create top value. One example is our axle drive system, including the inverter, which we are inserting there. It converts direct current into alternating current. The drive system and the inverter are a strong double feature. And once the demand for it is increasing -- for the vehicles is increasing, then these systems will be in high demand. But if plug-in hybrids become popular more quickly, then the inverters will be offered on a solo basis. And we will grow accordingly. Is it worthwhile? By all means and not just for this duo. Because for most of our product family, the market will grow by about 30% in the coming 5 years. And that's on an annual basis. So as you can see, both Continental and Vitesco Technologies are paving the way for profitable growth. In the crisis, we are keeping our goals firmly in sight, and we rely on innovation at an early point of time vigorously so and with determination, which is why we are and will remain pioneers. We are creating a healthy ecosystem of the new mobility because it contributes to a threefold type of climate protection: protects the environment, the economy and society. All 3 need our protection, and we can do it. We will be doing it. It's a perfect fit with our values with which we are creating value. That's what our heart is beating for. And what about U.S.? We are appreciating your support. Thank you very much for your attention.

Mr. Degenhart, thank you very much for this thorough report. Even back at the previous ASM, we spoke about the fundamental change in the automotive sector and about how Continental had acted early on to position itself for this transformation. And since then, we've experienced that this change is not only materialized as projected, but is actually being reinforced and accelerated by the coronavirus pandemic. I would like to thank even your team, Dr. Degenhart, for your outstanding achievement in steering the Continental Group through what is currently a challenging market environment. Now in spite of the challenges we are currently facing, you have demonstrated that you and your team are capable not only finding the right response to these challenges, but also of playing an active role in shaping the future of mobility. Dr. Degenhart, please pass on the gratitude of the Supervisory Board to all of your employees. Ladies and gentlemen, I would now like to proceed with the other items on today's agenda. As when we answer your questions, we will be dealing with all of the remaining agenda items together. Item 2 on the agenda is a resolution on the appropriation of net income. I explained earlier on what our reasons are for adjusting our original dividend proposal. The Executive Board and Supervisory Board thus propose that from the net income of -- in 2019 of EUR 5,855,935,132.26 recorded by Continental Aktiengesellschaft in fiscal 2019 a dividend of EUR 3 per share be paid out to our shareholders. This constitutes a total dividend payment of EUR 600,017,949. It's further proposed that the remainder of net income totaling EUR 5,255,917,183.26 be carried forward. Item 3 on the agenda is resolution on the ratification of the actions of the Executive Board members for fiscal 2019. The Executive Board and Supervisory Board propose that the actions of the Executive Board members in the office during fiscal 2019 be ratified for this period. Please note that when voting on this resolution, you can choose whether or not to ratify the actions of each individual Executive Board member. Item 4 on the agenda is a resolution on the ratification of the actions of the Supervisory Board members for fiscal 2019. Again, the Executive Board and Supervisory Board propose that the actions of the Supervisory Board members in office during fiscal 2020 (sic) [ 2019 ] be ratified for this fiscal year. Again, shareholders may cast their vote for each individual board member. Please note that this vote also applies to the actions of Supervisory Board members whose terms ended at the conclusion of last year's ASM on April 30, 2019, and who did not stand for a second term. This is why you will see the name of the 24 Supervisory Board members when casting your vote for Item 4. Item 5 on the agenda is resolution on the appointment of the auditor and the group auditor and of the auditor for the review of the interim financial report for fiscal 2020. Based on the recommendation put forward by the Audit Committee, the Supervisory Board proposes, KPMG AG Wirtschaftsprüfungsgesellschaft, Hanover as the auditor group and group auditor as well as the auditor for the review of the interim financial reports for fiscal 2020. The Audit Committee has declared its proposal free of improper influence from third parties and declared that no restrictive clauses were forced upon it, pursuant to Section 16 paragraph 6 of the EU Auditor Regulation. Moving on now. Item 6 on the agenda deals with the resolution on the approval of the remuneration system for Executive Board members. The Supervisory Board proposes that the remuneration for Executive Board members that was proposed during the Supervisory Board meeting at the 19th of February 2020, with amendments made on the 17th of March 2020 and on the 3rd of June 2020, be adopted. Now we proceed to item 7 on the agenda, which deals with the resolution on the remuneration system of the Supervisory Board members in conjunction with the resolution on the corresponding amendment to the Articles of Association of Continental Aktiengesellschaft. The Executive Board and the Supervisory Board propose a remuneration system outlined under Item 7 section A of the invitation and the Supervisory Board compensation derived from the system be adopted and that the articles of association be amended and rerun accordingly as outlined under Item 7 Section B of the invitation. Esteemed shareholders, it's not possible to have a proper cleaner recession in an online ASM. We would now, nonetheless, like to begin answering the questions that you submitted to as prior to the Annual Shareholders' Meeting. The questions that were submitted to us by midnight on Saturday, the 11th of July, will be answered by Executive Board members, Dr. Reinhart as well as Dr. Degenhart and Dr. Schafer. I will respond to any questions relating to the Supervisory Board, but what I will say will represent the Executive Board's view in the matters addressed. We'd like to emphasize that we will be responding to every question that was submitted to us, and we will not be taking advantage of the opportune afforded to us by law of merely answering a selection of the questions submitted. When answering the question, we will say the name of the person who submitted the question, unless this person has explicitly requested that he or she remain anonymous. I will now ask Dr. Degenhart to begin answering the questions. As I said earlier, the other Board members and myself as Chairman of the Supervisory Board will be answering questions where appropriate.

When answering the questions, we will start with the questions from the shareholder representative organizations. And the ever German Retail Shareholders association, the DSW as well as the SDK, also the retail shareholders association here will be spoken about as well as the umbrella organization for ethical shareholders. We will now start with the questions from institutional investors. We received questions from Deka Investment GmBH as well as from Union Investments. We will then answer the other questions that we received from individual shareholders. In order to avoid repeating ourselves, to the greatest extent possible, any questions that we've received from various shareholder organizations or individual shareholders that relate to the same topic have been grouped together. I will now begin with the question sent to us by [ Alexander von Keating of Shell ], who is representing the DSW. Now on the topic online, ASMs, [ Mr. Keating of Shell ] asked how many questions were sent to us and how many questions we will answer. By the deadline of the 11th of June at midnight, 76 questions were sent to us, and we will answer all of them. As such, the number of questions we received is more or less at the same level as at last year's Annual Shareholders' Meeting. And furthermore, [ Mr. Keating of Shell ] asks us the following questions. In reports in the media, we have heard that the Executive Board would welcome the prospects of online ASMs even once the corona pandemic has ebbed. Can you confirm these media reports? Yes. If not, then how can you explain that the Internet -- that the website, automanager.tv reported that this was the case. If the answer to the question is yes, is the Executive Board aware that material rights of small shareholders at a pure online ASM is significantly impaired? So the right to ask questions and also the right to contravene. And is the Executive Board aware that the -- this essential for the democratic rights of shareholders that next year that it is possible that we might have -- that we might want to refrain from rectifying the actions of the Board or management and that the plans to hold an online ASM next year would undermine shareholder democracy. The SDK asked how after the COVID-19 pandemic we are going to organize our ASMs. Now this is our response to these questions. Now the legislators did make -- I've said that even out -- we had come up with the idea that it might possible for public limited companies to hold online ASMs even outside of the pandemic. Now in terms of increasing digitalization, then it would be consistent to proceed with this type of thing. But if we do this, it's important that we preserve shareholders' rights. Now we shouldn't forget that today's format of an online ASM was an instrument that was adopted very, very quickly. And it is designed for the short term to ensure that despite the corona pandemic, we can hold annual shareholder meeting. This is why the current rules that's applied cannot serve as a blueprint for organizing an ASM in the future. Our efforts when preparing this year's ASM were geared towards providing the highest possible level of transparency and the best possible dialogue. One such example of this was our publishing of the manuscript of my speech of today before the ASM itself. And this has given our shareholders the possibility to ask their questions and provide them to us, knowing what I was going to say in my speech. For a comprehensive evaluation of our experiences with online ASMs, we believe it's still too early, but we will wait and see what the feedback of our shareholders on the matter is before making any decision. Now on to the first and second quarter of the -- on the corona pandemic, we see a number of different questions on this topic. [ Mr. Keating of Shell ] asked us the following questions: What impacts has the coronavirus crisis had on the company? How have our employees been affected, supply chain has been affected? And significant reluctance to purchase on the part of customers, how much -- how hard was the reluctance in March? How was this materialized significant default on receivables? What lessons have we learned? Is there anything you can tell us about the second quarter, if so yes? If not, then will you still be publishing your half year results on the 5th of August 2020. The SDK also asks a number of questions on this matter. The SDK asked what our sales growth will look like and also supply call-offs in May and June and whether we have bottomed out in terms of revenues already and whether we are now seeing an increase in revenues. Furthermore, they are asking whether there have been any significant regional disparages. And to start with the supply chains and our transport routes, the SDK has also asked whether there have been bottlenecks, whether there are still bottlenecks. And if so, in which area the most significant bottlenecks have been observed? The SDK also asked that, when resume in production, there may be supply bottlenecks and whether Continental has increased its inventories to ensure that production can run smoothly. And then the final question on the matter, the SDK would like to know that where there was a consequence of the COVID-19 pandemic, there has been an increase in overdue trade receivables. So the supply chain, Mr. Mathes from Deka Investment has asked whether this has worked, whether they have been intact, Continental and whether there will be any changes to this in the future. This is our response to these questions. The global COVID-19 pandemic has, of course, also impacted our employees significantly. Their health and their safety are of utmost priority. We'll go into this in more detail in other questions that we'll be answering today. Moreover, the corona crisis has had a massive impact on our company as it has on the entire German industry. It has an impact in all of the different business areas that led to a collapse in revenues and also to a significant decline in earnings and lower cash flow. Revenues in the month of April and March were most heavily impacted by COVID-19 in April and May. In the first quarter of 2020, the [ sharpest ] decline was in China and Asia. In March, the main negative impacts came from all regions equally. In April 2020, we had the lowest recorded in revenue. We had a slight uptick in May, which continued in June and came from more markets. That said, revenues thus far in 2020 is significantly down on the prior year period across all regions and is so significantly. We've just come to an end of the second quarter. It is the weakest in the history of the automotive sector since 1945. And based on [ corona ] customer call-offs, we expect to have a very, very difficult third quarter as well. We're seeing an increase in the number of units built in terms of charts, which indicates that we might have higher revenues than in the second quarter. But what's becoming clear is that it will be significantly below the level of the third quarter of 2019. The main reason for this trend is a persistent weak demand in Europe and North America. On to the supply chains. Thus far, there have been no critical bottlenecks in our supply chains and transport groups. We've always been able to deliver. We have been managing and monitoring our supply chains continually so that when we have a structural ramp-up, there will be no bottlenecks. Where it made sense, we have increased inventories. We're in dialogue with some of our customers about system approaches and big data applications to try and more effectively manage inventories in crisis situations. This would lead to greater transparency, even more transparency than we have now, and would also allow bottlenecks to be detected at an earlier stage. Now to the question about defaults on receivables. And with some of our customers, particularly in the tires and ContiTech business, but also with OEM customers, we have agreements that have extended payment terms to ensure that our customers can continue to do business. There are isolated cases in which due to lockdown or furlough schemes, the processes have been disrupted where our customers are and that this has led to delays in payments. We will have to wait and see what the financial situation of some of our smaller customers is going forward. It could have an impact on whether or not they can pay. Now in some cases, we are in a close coordination with our customers on the matter. Our semiannual results will, as expected, be announced on the 5th of August 2020. The corona crisis will not have any impacts on our accounting and reporting. Now despite the scale and complexity, within a very, very short period of time, we've had an orderly and structured adaptation to our situation in terms of safety and also the contraction in volumes. In all regions and in all business areas, our teams responded immediately. Our processes are designed in such a way that the necessary measures intertwine with one another and can be implemented at the same time. This relates to production stocks, also to adaptation of supply chains, HR measures, such as furloughing and reduced working hours and the time accounts, adaptation of costs and also reducing unnecessary investments. Now along our 4 corporate values, the entire organization exhibited a fantastic response. Now I'd like to move on to the strategy questions asked by the DSW. Now as the management moved away from its strategy, dividing company up into 3 core parts? Or is this simply a delay to implementation? What's the road map going forward? Will there be any significant strategical changes or delays? The SDK asked the questions on this topic as well. They asked what the specific plans are going forward when it comes to restructuring the group. What's the status of things today? Which specific measures have come about as a result of the COVID-19 pandemic relating to the strategic concept of the group restructuring? What about the IPO with Vitesco? How likely is it that this will materialize in 2021? Here are our answers to these questions. The organization of Continental Group is going to be geared toward a strategic management holding structure, and we continue to work on this unabated. The COVID-19 pandemic will not have any impact on the strategic concept of our group restructuring. Evidence of our progress and the implementation of these concepts are initial organizational changes that have been made since the 1st of January 2020 under the name of Continental Group, a new organizational structure encompassing 5 business areas, which include 23 business units, have been put into place. As you already know, in the automotive technology segment, last year, an automotive board consisting of my Board colleague, Nikolai Setzer, as a spokesperson, was established. We've also been bundling our research and development activities under our Chief Technology Officer, Mr. Abendroth, which is a very, very important step to ensure that in future, we'll be able to respond in a more -- with even greater agility to the challenges of digitalization. A core focus during this process has been the spin-off of Vitesco Technologies. As such, we have decided that this year, the spin-off will not take place, and we will only make this step once the market environment has exhibited a notable improvement. That said, we are introducing measures, which will ensure that the planned spin-off can take place as soon as possible once the market situation returns to something resembling normality. As to answer other questions from the DSW, I would now like to hand over to Wolfgang Schafer.

Thank you very much, Elmar. Now onto questions about fiscal 2019, [ Mr. Keating of Shell ] asked whether there were any reports in the compliance system. If so, how many were there? Were there any severe cases? If so, what were they? How were they resolved? If not, was the compliance system itself examined? In fiscal 2019, there were 694 reports sent to our compliance and anticorruption hotline, which, in our view, is testimony to the effectiveness of our compliance management system. In around 500 cases, investigations were actually concluded during the fiscal year. Just over 30% of them showed violations. And in more than half of these cases, disciplinary measures were imposed, which also included redundancies. These are individual violation, which do not pose any material risk for the company. The DSW, given that the revision to the forecast is asked, whether a new forecast will be issued, if so, when will this be? If not, why not? As the company announced on the 1st of April, the Executive Board decided, given the uncertainty about the duration of the restrictions with the coronavirus crisis and also what the consequences will be for production, supply chain and also demand, that the forecast would be withdrawn that we had for fiscal 2020. The one that you can find in the annual report for 2019. The conditions in our sales markets remain challenging and are characterized by uncertainty, which is why as things stand it's impossible to say when a new detailed forecast for 2020 can be issued. We will now come to answering the questions of the SDK. And if we haven't answered them already, I would like to hand over to my colleague, Ariane Reinhart, who will answer the first questions sent by the SDK.

Thank you very much, Wolfgang. SDK is asking for how many employees of Continental we registered for short-term work for how long and what the work situation for our employees looks abroad. Due to the interruption of production and lower demand in Germany, we applied for short-term work for about 30,000 employees in Germany since April. The majority of the Work Council agreements on short-time work will last into the fourth quarter of 2020. The duration and the degree of utilization of short-term work depends on the local specificities. As a consequence of the coronavirus pandemic, Continental decreased. And because of decreased demand, Continental reduced production by -- or idled production by a few days or many weeks since the beginning of May on more than 40% of the 249 production sites. Since June, we started production again. However, dependent on call-offs and renewed lockdowns in several countries, it might be that production has to be stopped again in various sites. SDK is also asking if apart from short-term work Continental also used other forms of state aid. Let me make one remark straightaway. Short-term work is -- and short-term pay is not a state aid. It's provided by the unemployment insurance team. It is paid by the unemployment insurance to the employees in order to avoid difficult situations and hardships and avoid redundancies. This is being financed by contributions to social benefit schemes. Continental, for example, over the past 10 years, paid EUR 400 million to the Federal Labor Office. The employees paid the same amount. This is about EUR 400 million. So all in all, we paid EUR 800 million to the Federal Labor Office. Because of the corona pandemic in 2020 for the time up until June, we will receive approximately EUR 85 million in terms of short-term work compensation. This is definitely well below the money that we paid in. On your question, Continental so far has not used any state aid on -- according to the current situation and our current assessment of the situation and on the basis of our balance sheet situation and the cash and cash equivalents that we have as liquidity cushion, we assume that we will not have to use state aid. The SDK continues to ask, are there any people infected with the coronavirus in your workforce? How many are there? And in which locations did you have most of the cases? As already mentioned by Mr. Degenhart, the safety and health of our employees is our uppermost and foremost targets and also basis of everything we do. To protect our employees, we developed a holistic concept, which is used in all the locations worldwide. Because of our proactive dealing with the pandemic and the continuous adjustments to developments of -- developments all over the world, we were able to keep infection rates with our people at a relatively low level. According to what we know up until today, on a worldwide scale, about 200 employees of Continental were infected. And the high infection rates, such as in individual countries, such as in Mexico, for example, also corresponds with the highest infection rates that we see amongst the workforce. But please bear with us that we cannot give you any further details due to the protection of privacy of our people. Referring to explanations of Elmar Degenhart in his speech, SDK is asking for savings measures. What is the level of saving measures? Which will work force, which region, which area will be most impacted? Let me answer as follows: with regard to the transformation of the automotive industry, our structural transformation program, Transformation 2019 to 2029 is our most important tool, as was announced in September 2019. We continue on our path of consistent implementation. Our program has a long-term to medium-term focus and is geared to make us future-proof. It is geared to the sustainable strengthening of our competitiveness in the long and medium term and on the global scale. And it's relevant for all divisions and all regions. We announced in September 2019, and in the next 10 years, about 20,000 jobs or out of 240,000 jobs will be affected by the changes, amongst the 7,000 jobs in Germany. As announced at the beginning of March, due to the potential deterioration of markets in the medium term, further measures are being assessed. Elmar Degenhart already mentioned it in his speech. The coronavirus further exacerbates the cyclic downturn in our industry. This is why we are currently readjusting our overall cost structure, thus reducing overcapacities. And we are also taking further measures, which will be effective in the short run. For example, we are also reducing personnel expenses and cost of material. When it comes to the additional savings measures, we are in close contact with our employee representatives, and we are aiming for mutually agreed mechanism. We try to work as fast as we can. But no matter how we try, it cannot be completely excluded that there might be forced redundancies as a measure of last resorts. But again, we will inform you on the details as soon as possible. On -- when it comes to the further questions of STK, I'd like to ask my colleague, Dr. Schafer, to take them.

Thank you very much, Ariane. With regard to the recent searches with Continental in connection with the defeat devices and diesel engines, SDK received several questions. SDK, for example, asked, on the 1st of July 2020, the premises of Continental in Hanover were again searched in connection with the diesel emissions scandal. Which information can you give us on these investigations to us as owners of Continental AG? Mr. Mathes of Deka Investment asked in addition to this, the investigations are geared against 2 engineers and 2 managers of Continental. Or do they only relate to individuals? Or do they also affect Continental as a company? What are the consequences of these investigations and also the detriment of critical shareholders [ often in context ]. As in that context, Continental says and claims that they did not supply software to customers for the purpose of manipulating emission tests. They still stand by this statement. And as Continental, according to its own statement, comprehensively cooperates with the authorities, how do you refute the initial suspicion that employees of the automotive division of Continental, compliant with Volkswagen's visions to provide them with such a defeat device? Can you approve that Continental technology and software was used to always keep in line with the permissible emission limits? And what do you think, what are the financial risk and reputation risks resulting from these investigations? Answer on this, we can confirm that in July, premises in several places such as Hanover, Frankfurt and Regensburg, were visited in the context of public prosecutor investigations in connection with defeat devices in Volkswagen diesel engines. We fully cooperated with the authorities. Most recent investigations are not geared and directed against Continental AG or any of its subsidiaries. As stated repeatedly, it was basically possible to meet the emission limits applicable in the relevant periods with the software that Continental supplied to its clients. Based on what we know today, we also see no reason to move away from our previous statement, namely that we did supply software to any of our clients for the purpose of manipulating emission test values. In the context of the surge of the public prosecutor, however, Continental learned that the public prosecutor investigates against specific individuals. Against this backdrop and with regard to our full cooperation with the authorities, Continental decided not to comment further on this ongoing process. Currently, we cannot also -- cannot make any statement on potential consequences of the investigation on the Continental Group. On the dividend, SDK is asking, a dividend payout of EUR 3 per share doesn't seem reasonable in economic and social terms with an earnings per share of minus EUR 6.13, a decrease in the free cash flow in the amount of 43% and an increase in the net financial debt of 145% and a dramatic drop in the share price and the introduction of short-term work for your employees. Also Mr. Mathes from Deka Investments asked with regards to the reduction of the dividend from EUR 4 to EUR 3 is asking how this number was chosen if the option of 0 dividend was also considered. Our answer to this. The last business year, due to a decrease in volume, was a challenging year, as we already explained. We still had a positive operative result, EBIT of EUR 2.2 billion in the group, the adjusted EBIT and the net income only turned negative to one-off effects with many of them having no cash impact at all. The Executive Board and the Supervisory Board, because of the massively changed market development due to the corona pandemics and the negative free cash flow, that was to be expected, the Executive Board and the Supervisory Board, again, discussed -- had an intensive discussion on the dividend proposal. In this discussion, we weighed the justified return expectations of U.S. shareholders and, of course, the need to strengthen the capital and the liquidity position of the companies. The result was to lower the originally suggested dividend of EUR 4 to EUR 3 per non-par value share. The dividend that is now suggested for the business year of 2019 fits the performance of the year under review and is also in line with the interest of all stakeholders. An option of paying no dividend at all was not discussed. On the current car market in China and auto market in China, SDK is asking, is there already a clear market recovery? Could there even be catch-up effects in the first quarter of 2020? The decrease in the market came from China and Asia. According to the Chinese Passenger Car Association, the manufacturing figures in February and March were 21.8% or 51.5%, respectively, before the figures of the previous year. In comparison, the number of build units in May was 10% above the previous year. And in June, 11.6% above the year. Researchers believe that this very quick recovery is mainly driven by catch-up effects and also state aid, massive state aid. So we reckon that, in the next 2 months, the sales development in China will be in line with the production in China, but we still believe that the situation in China is still fairly volatile. And then there is a question of SDK with regard to replacement tires. This was massively suffering from the lockdown. Do you see any increase in the sales figures or even catch-up effects? Or are the sales figures still as low? In the tire business for passenger cars, at different times in different regions, there were considerable plunges in demand. However, after the strict lockdown phases, there was considerable recovery. But the sales volumes in June was still below the numbers for the previous year. The plunge was not as expressed for truck tires and we also see catch-up effects in June. SDK also asked questions on the remuneration of the Management Board and Supervisory Board.

Thank you very much, Mr. Schafer. I'd like to take the questions on the proposed Executive Board Remuneration scheme. SDK asked as follows: What do the financial performance criteria have to look like so as not to trigger a short-term variable remuneration for the Executive Board within the new system? And could you also guarantee in the new remuneration system that in the future short-term variable payment is only paid if after deduction of cost of capital, the underlying net profit is still positive? I'd like to explain as follows: as stated in the invitation to today's ASM on Item 6 in Section D 4.4, you will have read that the short-term incentive is dependent on achieving a 40% EBIT, a 30% ROCE share and a 30% free cash flow. These targets are guided by the plans adopted by the Supervisory Board for the fiscal year 2020. Should these values not be achieved or should there be a significant shortfall, there would be no payout. Please bear with us that, with a view to the interest of the company, we cannot disclose the planning figures nor the target scale. Now the remuneration system to take effect the 1st of January 2020, which was adopted by the Supervisory Board, does not contain any guarantees, neither for granting a certain amount nor for the nonpayment of a variable remuneration. The payment and the amount of variable remuneration are determined by reaching certain targets. Defining the targets takes place on an annual basis by the Supervisory Board based on the strategic plans. No single exclusion criterion exists for the variable remuneration. Seeing that also nonfinancial and qualitative targets are included in the target definition, such a hole would be anything better typical. SDK goes on asking, how can you explain that the Executive Board members in 2019 continue to earn more than the median value between the minimum and maximum remuneration, even though fiscal 2019, as Dr. Degenhart explained in his speech, was rather poor, and you didn't even earn the cost of capital? And the SDK goes on asking, why is it that the Executive Board members still received a total short-term incentive of EUR 1.457 million for 2019 even though the financial KPIs were very disappointing indeed? On the first part of your question, I'd like to answer as follows: your analysis is based on the granted remuneration volumes stated on the tables. According to the German Corporate Governance Code, these amounts for the short-term incentive represent 100% STI and LTI. So the 100% targeted amount, but this is not the real amount for the STI and LTI. So according to this system of the tables of the German Corporate Governance Code, the value varies when it comes to granted payments. It's volume, but only when it comes to fringe benefits and pension and benefits and, by definition, is just above the median value between the minimum and maximum remuneration. The real remuneration paid in 2019, which also includes long-term elements, was significantly below the median value. So the actual payout ratio was clearly below the median value. And you can gather this from the tables in the annual report on Page 26 and the following pages. On the second part of your question, now we cannot be satisfied with the consolidated result. But of course, and we intend to improve it next year around. Because of the earnings situation in 2019, the performance bonus targets were only reached by 27% on average. The Tire division made a very positive contribution to that. Also you need to know about strategic targets have been defined, which relates to nonfinancial targets. The structure of the Executive Board's remuneration can be found in greater detail on Page 23 in the annual report in 2019. Another question from SDK is as follows: what remuneration -- what the CEO have received under the new system if the numbers from 2019 had been taken? So if the new system had to take an effect 1 year earlier. Well, the amount in the tables of the German Corporate Governance Code would have been unchanged because the short-term incentive and the long-term incentive are stated at 100%. Also, the real payments from the long-term incentive would not have changed. So if the Supervisory Board had a selected similar target criteria and an identical target achievement scale in the short-term incentive, the target achievement for the CEO would have stood at 35% compared to 18% in the fiscal year 2019. The total remuneration stated in the German Corporate Governance Code tables would have amounted for the CEO to EUR 4.2 million instead to EUR 3.94 million. Regarding the Supervisory Board's activities, SDK asked about the average attendance rate during Supervisory Board meetings and also who was the member that was not attending most frequently. Now the list with individual meeting attendance of Supervisory Board members in the fiscal year 2019 can be found on the website of the company, and it's been accessible there since the invitation to this Annual Shareholders' Meeting. And there you can see that the Supervisory Board members were fully present almost all of the time. Average attendance at meetings of the whole Supervisory Board stood at just under 98% and at just under 97% in the committees. Prof. Wolf was not able to attend 2 out of 7 meetings of the plenary session, which corresponds to an attendance rate of 71% for him. Another question by SDK is as follows: in the fiscal year-end or in the first few months of 2019, were there any compliance violations which were brought to the attention of the Supervisory Board? If so, what were these violations all about? And what were the most serious ones? The Head of Internal Audit and the Head of Compliance provides regular reports to the Audit Committee of the Supervisory Board. And I mentioned that in my report previously. Of course, this also includes single compliance violations. Any material violations for the company were not brought to the attention of the Supervisory Board in 2019 and the first few months 2020. Let's now continue with the responding to the questions by the Association of Ethical Shareholders. And I'd like to ask Mr. Reinhart to take the questions of the Ethical Shareholders Association.

Thank you very much, Mr. Reitzle. The Association of Ethical Shareholders has asked whether the Executive Board will pursue targets geared towards achieving the 1.5 Paris climate agreement target pointing towards the fact that the climate would heat up by 4.1 degrees centigrade if all companies or groups would have a climate footprint similar to Continental by 2050. If Continental were to implement its own climate target, heat buildup would still be at 2.9 degrees centigrade. On that, we'd like to note as follows: with our climate targets, we fully meet the sector-specific targets under the Paris Climate Agreement. We're even going to overachieve them. The figures stated initially come from the [ right based on ] science organization. And Continental is coordinating the discussion with them, and we would like to refer you to their results for a correct interpretation of the figures. The association has asked the following questions: how do you ensure going forward that your corporate decisions will be compatible with the 1.5-degree target? What are your planned greenhouse gas emissions reductions in the next 5, 10, 15 and 20 years? Do you have any targets for Scope 3 of indirect greenhouse gas emissions? And what are they? If not, why not? Would you have the science-based target initiative review your own targets? If so, when? And if not, why not? Do you reexamine your projects and investments regarding climate risks? Or are you planning to do so? If so, when will that be? And what will be the extent? If no, why not? On the climate strategy, we have received the following question from Mr. Mathes from Deka Investment. Why does it take so long, more specifically, up until 2040, to make your production processes climate-neutral? What are the problems? How does Continental ensure comprehensive environment management on the part of its suppliers? And how do you supervise it? On these questions, we would like to comment as follows: as mentioned initially, our climate targets overachieved the sector-specific Paris Climate Agreement targets. Until the end of 2020, we will shift our external energy procurement, as Ms. Degenhart explained, in global production to renewable energies. And we do so by obtaining certificates of origin. This will lead to our own emissions, a reduction of up to 70%. By 2040, we intend to make sure that our own production processes and up until 2050 the entire value chain will become climate-neutral. This means that we're proceeding more quickly than many of our competitors. We are still examining whether or not to submit our targets with the science-based targets initiative. When it comes to assessing projects and investments, climate aspects are always considered. And this process is further developed continually because climate risks are part of risk management. For any, as suppliers, we are defining sustainability requirements along the lines of our code of conduct for business partners, complying with these requirements -- compliance with these requirements is assessed by way of self-disclosures via the recognized sustainability platforms, EcoVadis and NQC. The Association of Ethical Shareholders also points out that Continental is not fully meeting the UN Guiding Principles on Business and Human Rights. And in that context, it quotes a study from the Business and Human Rights Resource Center and the ZHAW School of Management and Law according to which, from 20 large groups, 6 companies are in a better position than Continental. The association asks how the Executive Board is going to make sure that the UN guiding principles will fully be met. Well, let me make this quite clear. Continental fully commits itself to the UN Guiding Principles on Business and Human Rights and to the core labor standards of ILO. And also -- and I used to work with the ILO in a previous point in my career. We do have a 2-tiered and inclusive management approach, which is both geared towards our locations and the supply chain. The group's sustainability department coordinates the improvement of this management approach. The Association of Ethical Shareholders also asks how many audits to verify the supplier self-disclosures relating the compliance with human rights and environmental standards were conducted in the last fiscal year. And what deficiencies were identified at which suppliers' compliance with self-disclosures is assessed -- by way of the performance in self-disclosures via these [ vendor ] platforms, EcoVadis and NQC. These platforms also do more far-reaching disclosures, such as verification of the validity of certificates. Above that, we did only do a small number of selected sustainability audits. And please bear with us that we cannot make no public statements on select suppliers. Now there is a big number of questions from the Association of Ethical Shareholders, which are related to business relations between ContiTech-OCP Morocco on the supply of conveyor belts. And so for you to better understand this question, dear shareholders, we would like to make the following upfront explanations without supporting these statements ourselves. Now the Association of Ethical Shareholders has explained that nongovernmental organizations repeatedly ask Continental to stop the activities linked to the conveyor belt in the occupied Western Sahara region. It is alleged that the conveyor belt, more than 100 kilometers, which transports phosphate to the coast, was partly built with the help of Continental in 1971 and it is alleged that ContiTech is still supplying replacement belts. The extraction of mineral resources without the explicit approval of the Sahrawi people, according to the Undersecretary General of the UN and the Chief Legal Adviser, Hans Corell, constitutes a violation of international law. With the expiry of the contract, as per the 30th of June 2020, ContiTech would have had the opportunity to exit this business. The representative of the Sahrawi people, Frente Polisario, wrote a letter in March of this year to Continental making quite clear that the Sahrawi people never approved of the activities of Continental in the region. The subsidiary of OCP, Phosboucraa, was planning to extend and upgrade the infrastructure in the occupied Western Sahara region. In cooperation with Western Sahara Resource Watch, the Ethical Association -- ethical shareholders asked the following question, has the supply contract with OCP been extended? If so, what is the term? Is it still possible that replacement conveyor belts that you have pledged to OCP by way of a contract will still be used in the conveyor belt system in the Bou Craa mine in the Western Sahara region? If the contract has not been extended, will you enshrine by way of contract that the use of your replacement conveyor belts will not take place in the occupied area? If the contract is extended and or -- how does Continental justify this in the context of the legal opinion by Hans Corell and the explicit rejection by the Sahrawi people of your activities? Do you intend to try and obtain the approval of Frente Polisario if your future economic activities were to allow for the extraction and export a phosphate from the occupied Western Sahara region by your providing replacement conveyor belts? Thus, Continental rule out that products of the company might still be used in the context of an expansion of the mine? Can ContiTech guarantee that the current supply contract in the event of an extension might not be complemented by maintenance clauses, which include the facilities in the Western Sahara? [ Mr. Vanin from Gear Investment ] also asked whether ContiTech is verifying these business transactions like other companies did. Now we would like to try and answer as follows: we would like to point out that Continental is not economically active in the Western Sahara, and it does not supply anything to Western Sahara. And this won't be changed. The supply contract you mentioned has not been extended. Whether or not a new contract will be concluded and what the content might be, well, we cannot tell you anything about that for the time being. Discussions are still ongoing, and please bear with us. We cannot disclose any details from the current talks. The status of the Western Sahara region has been unsolved for many decades. Like many other interested parties, we are hoping for a peaceful solution of the overall situation. We deeply regret the fact that after all this time, a political solution is still not in sight despite all the efforts underway. Our business activities do not have any political background. Together with the international community and the United Nations, we also would like to see adequate political processes to bring about a peaceful solution to this conflict, which is still going on for the benefit of the people in the Western Sahara. We will now continue with answering the questions by Mr. Mathes on behalf of Deka Investment. On that note, I'd like to hand over to Elmar Degenhart.

Thank you very much, Ariane. And Mr. Mathes asked, for 2020, Continental reckons with sales and revenue clearly below previous years' levels, which business units will be hit strongest because of corona crisis and which will be hit least? When can the revenue situation in individual units be improved? Can Continental come through the crisis without any state aid? We would like to answer as follows: all the business units have seen a clear decline. The OEM automotive business in all of our business units is hit hardest. Negative influence on the spare parts and industrial business are also substantial. As explained before, month of April as regards sales and revenue was the weakest month. May was above April. June was above May, but the June is still clearly above previous year -- below previous year's levels. For next month, I suppose that there won't be any tighter corona measures, a slight recovery, but always below previous fiscal year's level. Number of worldwide produced cars is only increasing slowly from our -- according to our estimate, latest and after 2025, we will reach the level that we had in 2017. We have already explained that Continental can come through the crisis without any state assistance. Our balance sheet structure and liquidity are very solid. With the 3 bonds placed on the capital market this year, we'll get a total of above EUR 2.1 billion. In addition, we expanded our credit facility by EUR 3 billion. In the context with the structural program 2019 through to 2029 further measures, Mr. Mathes asks the following questions: the structure program, Transformation 2019-2029, has the target to reduce gross costs from 2023 onwards by about EUR 500 million per year. What's the status of the implementation of the program? How much of the planned EUR 500 million gross savings are there in net terms? Apart from the structural program, Continental comes up with further measures that should have a short-term effect, shortening investment reduction of liquid assets, reduction of personnel and operating expenditure, which amount is supposed to be saved with these measures? Are the savings just temporary or long term? Can planned investment reductions lead to opportunities for the future we missed? What do these measure mean for reducing jobs? Our answers here: with a view to the overall transformation of the automotive industry, our structure program announced in September 20, 2019 called Transformation 2019-2029 would state our most important means and the implementation will move forward consistently. Thus, since 2019, we have started designing our biggest transformation and realigned ourselves. This is true for our technologies and also for our organization. We are pursuing a strategy up until 2029. It consists of 3 parts. Firstly, we are adapting our portfolio. Everything that doesn't create value on a permanent basis doesn't have a future. The part that's growing profitably will be expanded. Secondly, as a match to that, we optimize our global production component. Thirdly, we accelerate our structures and make our structures even leaner. The program has a midterm to long-term focus and will secure our future viability. At the same time, it promotes sustainable strengthening of our mid- and long-term competitiveness worldwide. Our target is it to improve our profitability with the structural program from 2023 onwards. We expect the major part to have an effect on the result. Investment will be reduced in 2020 by at least 20% year-on-year. Current assets, we will possibly adapt to the sales development because we do not yet foresee the sales development in the fourth quarter. A statement on working capital at year-end is not yet possible. The operational and personnel costs were adapted at the beginning of the corona crisis. We had preliminary plant closures, short-time work, reduction of working time, reduction of traveling expenses, events and the likes. As a whole, we expect that our fixed costs in 2020 will be below the level of 2019. Part of the measures like short-term work are of short-term nature, while other measures will be effective beyond 2020, depending on the business development. Each and every investment decision will be taken with a view to the future opportunities and risks are carefully looked at. Lower sales or expectations lead to lower investment. Investment that can be late into the future will be analyzed very precisely at the moment. By no means do we want to miss opportunities. As Ariane Reinhart said before, in the framework of our program, for transformation in September 2019, we announced that in the next 10 years, worldwide, probably up to 20,000 jobs of about 240,000 jobs now will be hit by changes. This will include about 7,000 jobs in Germany. By now, we have changed about 3,000 jobs, 2/3 of the people concerned have left the company. As announced beginning of March, at the moment, with a view to the markets that are getting worse and maybe also in the mid run, further measures are being checked. Coronavirus unfortunately is a further problem forward and it means more economic decline of our industries. Therefore, we are adjusting our overarching cost structures. We are reducing overcapacities and come up with further measures with short-term effects. And we also changed the working and operating costs. We are saving further money. We're talking about a couple of hundreds of million euros. This contribution of this, some goes beyond what we have decided to burn already. It will have an effect up until 2022. As explained extensively, we are in close contact with the representatives from our employees. Potential compulsory redundancies, as we said, would be the means of the last resort. On electronics and software, Mr. Mathes says that the most important step on the way towards a unified operating system is a completely new car electronics system and that automotive manufacturers, BMW, Daimler and Volkswagen, independent of each other, work on operating systems. Mr. Mathes asks, and how far is Continental with electronics, with the control units and the software, and that he means the operating system or operating systems. And how fast Continental included in the development of the automotive manufacturers. Would it make sense for Continental to develop its own operating system and then offers it for license use? Further question of a shareholder says, can software replace car hardware or make it completely superfluous? Here, we would like to say that Continental is a long-term and highly regarded development partner of almost all the well-known automotive manufacturers, in particular, a very close partner of the German automotive manufacturers for the development of electronics control units and software. Because of its complete automotive portfolio and the system understanding, Continental is a close partner in the development of future car and vehicle architectures, and they are core pieces, the high-performance computers. In a physical sense, software cannot replace car hardware. Each and every piece of hardware is operated on a piece of hardware. This is not just true for today's computers, but also for quantum computers in the future. Hardware and software design, therefore, have always to be aligned. Continental can do both, and this is one of our strategic advantages. Continental and its subsidiary company, Elektrobit, for decades, have developed control units with operating systems and that have an excellent basis to develop an entire software framework, including an operating system. The new generation of high-performance computers to bring those on the road is going to be a joint effort by automotive manufacturers and technology companies, the likes of Continental. In doing so, the differentiating parts for automotive manufacturers and brands will stay under the control of OEMs in the significantly growing overall extent of software, in particular, in the software shares that are not differentiating for OEMs. Continental even today offers lots of software products for licensed use and will significantly expand this position in the future. Irrespective of that, Continental will also further drive forward the hardware business and optimize it because it's strong in profit. On assisted automated and autonomous driving, Mr. Mathes asked, which influence has the corona crisis on the demand for highly automated driving system? Which product launches on the part of the OEM are further developed? And which are being delayed? Elon Musk promises that the technology for autonomous driving Level 5 will become finalized in 2020 this year. Does Continental know more? In this context, 1 shareholder asks the following question: How do you estimate the market potential of self-driving cars up until 2030? Analysts only see very low potential up until 2030. It is too early to assess the effects of corona crisis on the market launch of highly automated and autonomous driving systems. It is clear, however, this is a very long-term process which leads over numerous stages. The prerequisites for the more and more complex driving situations will mainly be created because of the technical maturity of the product, software and technology required for this. Development of components for radars, LIDARS, ultrasound and camera systems, including high-performance computers and the software development happens without any interruption. The focus of our customers in the area of automation, currently and in the mid run, will be on a broad introduction of driver assistance function and partially automated driving, the so-called Level 2+, which can serve as a platform for future Level 3 up to Level 5 systems. In the research area, people work on the development of redundant systems that are necessary for Levels 3 and -- through to 5 and other highly specified applications for driverless mobility. I'm here referring you to our development platform, CUbE, as an example. Level 5 driving would mean that an automatic system can dominate all of the situations in each and every case, those cases that also human beings can dominate. With this definition, from our point of view, true Level 5 driving can only be depicted in the far future. Driverless mobility will start in specific areas where the environmental conditions are less complex, in clearly delineated urban areas, on airports, in industrial parks or on trade fair grounds. These examples would then mean Level 4 driving. This stage would be driverless, consistently so, but it would be limited to the application cases I just mentioned. We expect first examples on the market from 2022 onwards approximately. And development won't come to a standstill. The way towards fully autonomous driving requires lots of different individual steps that would serve the purpose to dominate the growing level of complexity. The further expansion of the properties of the cars will then probably in subsequent years, happen on the basis of the experience made in Level 4. This is our point of view on the developments to be expected. Please bear with us that we cannot give any comments on our customers or on competitors. Now on to fuel cells, Mr. Mathes says that hydrogen as an energy source is moving up and up, possibly also in the automotive sector. He asks, what has Continental to offer around the fuel cell? Are fuel cell stacks an issue for Continental? Each fuel cell car needs a subsystem and electric drive. And thus, the know-how as available in Vitesco Technologies in electrification. Also, if fuel cell drive system requires a multitude of components that are used in the drivetrain of an ICE engine, a market where Vitesco Technologies is very well placed. Vitesco Technology has extensive know-how on the use, in the vehicle, on control technology and on components for fuel cells. With its extensive competence in sensors, electrics, electronics and the control of complex systems, Vitesco Technology can contribute to a successful development of this technology. Example of products are actuators, like valves in the aircraft, sensors, such as gas pressure measurements in hydrogen environment and control units, including software based on engine control units. Vitesco Technologies is not active in the production of fuel cell stacks. Still, we are closely observing the development on the market because we have functional competencies from traditional fields of business that could be transferred to the fuel cell stack. With KEMET's Technical University, we have an excellent partner for testing materials components and entire fuel cell systems. Specifically on Vitesco Technologies, Mr. Mathes asks the planned spin-off of Vitesco Technologies has been delayed for the moment. What's the percentage of the sales of Vitesco that goes towards e-mobility? What does the further development of e-mobility look like? Is it to be assumed that the spin-off will be decided by the Annual Shareholders' Meeting next year in 2021? What are the major roadblocks when it comes to the spin-off of Vitesco's that still need to be treated? And because of the insourcing of e-components in the automotive manufacturers, is that the danger for Vitesco, that business unit -- business volume will be moved away? We want to give you the following answer on these questions. The major share of the sales in e-mobility is associated to the electrification technologies unit under the business unit of Powertrain technology. Electrification technology corresponds to about 5% of the sales of powertrain technologies. As I already said or as was already said, we have decided not to carry out the planned spin-off of Vitesco Technologies this year and to only go this way once the market environment has clearly improved and has become firmer. Major work packages to do to -- on the way towards a potential spin-off are the organizational separation between group and automotive functions for which we are developing organizational concepts and talks are being led with potential staff members, and it's also the IT system separation that needs to be carried out. Similar like in traditional businesses with internal combustion technologies, we see diverging trends with the different manufacturers when it comes to in-sourcing strategies in the area of the drivetrain. This is the broad portfolio -- product portfolio of Vitesco Technologies in electrification. We can offer system solutions or individual components to OEMs, adapted to their requirements through the potentially higher content per vehicle for Vitesco Technologies, all around the electrified drivetrain. Even with partial in-sourcing of OEMs, this still remains a very interesting and future-oriented business field that we can service because of our diversification. And there is a question on Mr. Mathes on working time models. And I would like to ask Ariane Reinhart to answer the question.

Thank you very much, Elmar. Mr. Mathes asks, Continental wants to reduce -- to replace short-term work with a collective reduction of working time plus a financial support by the state, how realistic? Is it how much jobs can be kept up? The instrument of shortening working time is one of various approaches how companies and employees can be kept healthy in economic terms and be moved to 2025. It would be a so-called corona bridge. We are talking to the employee representatives at the moment in order to talk about the current situation. As with regards to the question about potential state funding, it was important for us to start a discussion about new labor market instruments. If and whether political decisions come up, that's something which is open for us. We come to the answer of -- to the question that [ Mr. Wenning ] asked for Union Investment. Elmar, I would like to ask you to answer those questions.

Thank you, Ariane. [ Mr. Wenning ] asked, how do you make sure that the area of automotive technologies -- how do you make sure that the area of automotive technologies, which in your speech, you called the engine room for intelligent mobility is not be made superfluous in software development by Google, NVIDIA, Tesla and others. Connected mobility needs lots of ingredients that need to be adjusted apart from software development and data management, aspects like system integration of electronics, mechanics and software belong to it, the safety technology aspects and validation of registration relevant processes and tools belong to it. And Continental has far-reaching experience and partnerships worldwide in all of these aspects. So the software giants and semiconductor producers from North America are fast, strong in finance and innovative, but none of the players has all of the necessary capacities and requirements and experience. Continental consistently moves forward in the area of strength and cooperates with strong partners and innovative small start-ups in order to add to its competencies. In particular, with a very complete automotive portfolio and the strength as a system integrator, Continental has an excellent starting position to build bridges between consumer electronics and automotive technology. And thus, we can design -- codesign mobility of the future. Furthermore, a shareholder asks us how we assess the statement that the real disruptive change for the automotive business will come from Amazon, Google Waymo or Apple and the likes. This statement is right in that sense that ride-sharing and fleet management, booking and payment systems are strongly highlighted by digital platforms and the software parts they're in. The consumer electronics coming into the car and user experience modules, for example, voice recognition are mainly marked by the players you mentioned. However, I would strongly reject the grammar form you used in your question at the time. The disruption has already happened. Now there is the race on that decides who will be the winners and losers of this disruption in the mobility business. [ Mr. Wenning ] asks, when the clean vehicle drives will have a higher share of the sales and EBIT at Vitesco technology than the ICE technology. He also asks, has the diesel technology at Continental still in the future? If so, for how long? Which revenue outlook does the e-mobility drive offer also hydrogen for Continental? So what order of magnitude are we talking about? And what time horizon? In the short and midterm, we will continue to develop and set up production and organization. We'll invest into those in order to service the strong market growth. In recent years, we have already invested more than EUR 2 billion into e-mobility, and we are in an excellent position. Please understand that, as of today, we can't give you any concrete annual figures. On diesel technology, we do not expect a renaissance of internal combustion engines. The technology, however, is here to stay for a longer period of time yet, in particular, partially electric, we see major savings potential in emissions. Activities in the hydraulics area and in emissions retreatment will not be looked at a core business for Vitesco technology. And therefore, within the next decade after fulfilling the existing orders, this will be ended. In the fuel cell technology, we see a major contribution for C02 3 e-mobility. We observed the market development with a view to future opportunities, and we take a very close look at the development. And for example, through and with Vitesco Technologies, we are active in the H2 Bavaria initiative as a partner in order to actively co-shape the future. For higher volume use in passenger cars, however, an all area covering availability of H2 -- of hydrogen filling stations will be necessary. Up until then, we have to take it there will be a limited use in defined fleets. All area covering use of the technology in passenger cars, we do not see happening before 2030. The fuel cell as a future technology, however, does play an important role for zero-emission drives of trucks and buses there. It will most probably come much earlier than 2030 and will be used there. Because of the excellent environmental properties of fuel cell drives, the use in heavy passenger cars and on long distances would be a very meaningful additional alternative for battery electric drives. Therefore, we cannot understand why this area in the current research subsidies of the federal government on hydrogen does not form a focus. In the use for passenger cars, there is high potential for environmental protection and added value that other countries already support with high sums that they give to research. The last question of [ Mr. Wenning ] goes to Professor Reitzle. Would you please answer the question?